Sensex surges to record high; blue-chips gain

Indian shares surged on Monday to record highs as blue chips such as Coal India and Larsen & Toubro continued to rally on hopes of wide-ranging reforms by the new Narendra Modi government.

Foreign institutional investors bought a net 12.83 billion rupees ($217.1 million) worth of shares on Friday, a sixth consecutive session of buying that brought their total so far this year to $8.5 billion, according to exchange and regulatory data.

Expectations of reforms and optimism about a recovery in the domestic economy have sent domestic shares up 21.4 percent so far this year, outperforming a 5 percent gain in the broader MSCI Asia-Pacific index excluding Japan.

"It's a strong bull run what we are seeing now. Union budget would be the next key event, but that would not be more than a financial statement," said Jagannadham Thunuguntla, chief strategist at SMC Global Securities.

"What the market is expecting is a key decision making process and early signs show that the (government's) direction is right. Unless something dramatic happens, the market is set for further upmove," said Thunuguntla.

The benchmark BSE index rose as much as 0.98 percent to hit a record high of 25,644.77, surpassing the highest level posted on Friday. The index closed 0.72 percent higher at 25,580.21.

The broader NSE index gained as much as 1.2 percent to hit an all-time high of 7,673.70. The index closed up 0.94 percent at 7,654.60.

Shares in Larsen & Toubro (L&T) closed 3.6 percent higher, gaining for the sixth straight session as investors hope that the new government's reform agenda would mainly focus on infrastructure sector, where L&T is a major player.